Nucor's second quarter performance better than expected
by David Fleschen
Nucor Corporation (NYSE: NUE) today announced guidance for its second quarter ending July 4, 2020. Nucor expects second quarter earnings to be in the range of $0.10 to $0.15 per diluted share. First quarter of 2020 earnings were $0.07 per diluted share and second quarter of 2019 earnings were $1.26 per diluted share.
Included in the first quarter of 2020 earnings were losses on assets of $287.8 million, or $0.92 per diluted share, related to our equity method investment located in Italy, Duferdofin Nucor S.r.l.
"Our most important value is the health and safety of our teammates, their families and the communities where we operate," said Leon Topalian, Nucor's President and Chief Executive Officer. "Many state and local governments are taking actions to phase-in the gradual re-opening of their economies as we progress through the COVID-19 pandemic. The enterprise-wide efforts to conserve cash and support our teammates during the COVID-19 pandemic as described in our first quarter earnings release and 10-Q have not changed significantly, and we will proceed with caution during these uncertain times.
"Nucor's better-than-expected second quarter performance reflects both the power of our culture and the strength of our business model. By working hard and working together, the 27,000 men and women on the Nucor Team have done an excellent job of taking care of each other, our customers, and our shareholders. "
Second quarter operating performance has been better than expected and we have estimated our guidance range accordingly. Though overall market conditions are still challenged by the pandemic, demand in nonresidential construction has been resilient during this time. Nucor's downstream steel products segment is having another strong quarter. In our steel mills segment, the impacts of the COVID-19 pandemic have most negatively impacted our sheet and plate mills due to weak oil and gas market activity and customer production disruptions. Although domestic automotive production was halted due to COVID-19 concerns, we are seeing a strong rebound in automotive related steel demand. The automotive industry experienced better than expected sales during their outage period resulting in low inventory levels as we enter the third quarter of 2020. Our raw materials segment has been challenged by decreased pricing for raw materials and the impact of an outage at our DRI facility in Trinidad to comply with that country's stay at home orders.
We believe Nucor is well positioned to navigate any future challenges that arise from these current situations given our advantaged cost position, flexible production capability and financial strength. We were pleased to be able to further enhance our financial flexibility with the recent issuance of $500.0 million of 2.000% notes due 2025 and $500.0 million of 2.700% notes due 2030.
Source: Nucor, Photo: Fotolia